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2010 Annual Corporate Governance Report
Activities Report
Legal Documentation
Corporate Gover
Endesa
Annual Corporate
Governance Report
Listed Companies
Issuer’s Particulars Year Ended: 31 / 12 / 2010 Tax Id Number: A-28023430 Company: ENDESA, S.A.Contents
A Ownership Structure
B Management Structure of the Company
C Related Party Transactions
D Risk Control Systems
E General Meeting
F Degree of Compliance with Corporate Governance Regulations
Summary
A Ownership Structure 5
B Management Structure of the Company 9
C Related Party Transactions 37
D Risk Control Systems 42
E General Meeting 48
F Degree of Compliance with Corporate
Governance Regulations 52
Ownership Structure
A.1. Complete the following table on the Company’s share capital:
Date of last change Share capital (Euros) Number of shares Number of voting rights
01/10/1999 1,270,502,540.40 1,058,752,117 1,058,752,117
Indicate whether there are different classes of shares that carry different rights:
No
A.2. List direct and indirect holders of significant interests in the Company at year end, excluding directors:
Name or Company name
of shareholder Number of direct voting rights Number of indirect voting rights (*) % of total voting rights
Enel Energy Europe, S.R.L. 974,717,763 0 92.063
Enel, S.P.A. 0 974,717,763 92.063
Name or Company name
of indirect holder of interest Via: Name or Company name of direct holder of interest Number of direct voting rights % of total voting rights
Enel, S.P.A. Enel Energy Europe, S.R.L. 974,717,763 92.063
State the most significant changes in shareholder structure during the year:
A.3. In the following tables, list members of the Board of Directors who hold voting rights over Company shares:
Name or Company name of director Number of direct voting rights Number of indirect voting rights (*) % of totalvoting rights
Mr. Borja Prado Eulate 4,786 0 0.000
Mr. Fulvio Conti 200 0 0.000
Mr. Andrea Brentan 100 0 0.000
Mr. Alejandro Echevarría Busquet 200 0 0.000
Mr. Claudio Machetti 100 0 0.000
Mr. Gianluca Comin 100 0 0.000
Mr. Luigi Ferraris 100 0 0.000
Mr. Luis de Guindos Jurado 550 0 0.000
Mr. Miquel Roca Junyent 363 0 0.000
% of total voting rights held by the Board of Directors 0.001
In the following tables, list members of the Board of Directors who hold rights over Company shares:
A.4. Indicate, where applicable, any existing relationships of a familial, commercial, contractual or corporate nature between holders of significant interests, insofar as they be known to the Company, unless they are of scant relevance or arise in the course of ordinary business dealings:
Type of relationship: Corporate
Brief description: Enel, S.p.A. is sole shareholder of Enel Energy Europe, S.R.L. Related party name or Company name: Enel Energy Europe, S.R.L., Enel, S.p.A.
A.5. Indicate, where applicable, any existing relationships of a commercial, contractual or corporate nature between the holders of significant interests and the Company or its Group, unless they are of minor relevance or arise in the course of ordinary business dealings:
Type of relationship: Corporate
Brief description: Endesa Generación, S.A. and Enel, S.p.A. hold interests of 40.88% and 4.31%, respectively, in Elcogás, S.A.
Related party name or Company name: Enel, S.p.A. Type of relationship: Corporate
Brief description: Endesa Generación, S.A. and Enel Green Power International BV (an Enel Group subsidiary), hold interests in Enel Green Power España of, respectively, 40% and 60%.
Related party name or Company name: Enel S.p.A.
A.6. Indicate whether the Company has been notified of any shareholder agreements that may affect it pursuant to Article 112 of the Spanish Securities Markets Law (SML). If so, briefly describe them and specify the shareholders party to those agreements:
No.
Indicate whether the Company has knowledge of the existence of concerted actions between shareholders. If so, describe them briefly:
No.
Expressly indicate any amendment to or termination of said agreements or concerted actions during the fiscal year:
A.7. Indicate whether there are any individual or legal entities that exercise, or that may exercise, control over the Company, pursuant to Article 4 of the Securities Market Law. If so, describe them briefly:
Yes.
Name or Company name: Enel Energy Europe, S.R.L.
A.8. List the Company’s treasury shares in the following tables:
At year end:
Number of direct shares Number of indirect shares (*) Total % of share capital
0 0 0.00
(*) Via:
Total 0
Pursuant to Royal Decree 1362/2007, show details of any significant changes during the year:
Gains/(losses) from disposal of treasury shares during the financial year (thousands of Euros) 0
A.9. State the current terms and conditions of authorisation granted by the General Meeting to the Board of Directors to carry out acquisitions or transfers of treasury shares.
At the Ordinary General Meeting on 21 June 2010, the shareholders authorised the Company and its subsidiaries to acquire treasury shares pursuant to Article 75 and the first additional provision of the Spanish Companies Act.
I. To revoke and render void, where not applicable, the authorisation to acquire Company share derivatives, granted by the shareholders at the Ordinary General Meeting held on 30 June 2009.
II. Again to authorise the acquisition of treasury shares derivatives and their pre-emptive rights, pursuant to Article 75 of the Spanish Companies Act, under the following conditions:
a) Said acquisitions shall be made via any legally accepted method, directly by Endesa, S.A., by its Group companies, or by proxy, up to the maximum legal limit. b) The minimum price per share in said acquisitions shall be share par value and the
maximum price shall be that equivalent to the listed share price plus 5%. c) This authorisation shall be valid for 5 years.
Said authorisation also applies to the acquisition of shares to be delivered directly to employees or directors of the Company or of a Group subsidiary, or as a result of exercising purchase options that said employees or directors might hold.
A.10. Indicate, where applicable, any legal or statutory restrictions on the exercise of voting rights and any legal restrictions on the acquisition or transfer of interests in the share capital. State whether there are any legal restrictions on the exercise of voting rights:
No
Maximum percentage of voting rights that may legally be exercised by a single shareholder 0
State whether there are any statutory restrictions on the exercise of voting rights:
No
Maximum percentage of voting rights that may be exercised by a shareholder due to
statutory restrictions 0
State whether there are any legal restrictions on the acquisition or transfer of equity interests:
No
A.11. State whether the shareholders have passed a resolution at the General Meeting to adopt measures to neutralise a take-over bid pursuant to the provisions of Law 6/2007.
No
If so, describe the measures approved and the terms under which said restrictions shall become void:
Management Structure of the Company
B.1 Board of Directors
B.1.1. State the maximum and minimum number of directors as per the Bylaws:
Maximum number of directors 15
Minimum number of directors 9
B.1.2. List the Board members in the following table:
Name or Company name
of Director Representative Position on Board Date of first appointment Date of last appointment Appointment procedure
Mr. Borja Prado Eulate — Chairman 20/06/2007 20/06/2007 Vote at General Meeting
Mr. Fulvio Conti — Deputy Chairman 25/06/2009 30/06/2009 Vote at General Meeting
Mr. Andrea Brentan — Chief Executive Officer 18/10/2007 30/06/2008 Vote at General Meeting Mr. Alejandro Echevarría Busquet — Director 25/06/2009 30/06/2009 Vote at General Meeting
Mr. Claudio Machetti — Director 18/10/2007 30/06/2008 Vote at General Meeting
Mr. Gianluca Comin — Director 14/09/2009 14/12/2009 Vote at General Meeting
Mr. Luigi Ferraris — Director 18/10/2007 30/06/2008 Vote at General Meeting
Mr. Luis de Guindos Jurado — Director 25/06/2009 30/06/2009 Vote at General Meeting
Mr. Miquel Roca Junyent — Director 25/06/2009 30/06/2009 Vote at General Meeting
Total number of directors 9
Indicate any directors removed during the year:
B.1.3. List the members of the Board and their status in the following tables:
Executive Directors
Name or Company name
of director Committee proposing appointment Office per Company organisation chart
Mr. Borja Prado Eulate Appointments and Remuneration Committee Chairman
Mr. Andrea Brentan Appointments and Remuneration Committee Chief Executive Officer
Total number of executive directors 2
Total % of the Board 22.222
Institutional Outside Directors
Name or Company name
of director Committee proposing appointment
Name or Company name of significant shareholder represented or proposing appointment
Mr. Fulvio Conti Appointments and Remuneration Committee Enel, S.p.A. Mr. Claudio Machetti Appointments and Remuneration Committee Enel, S.p.A. Mr. Gianluca Comin Appointments and Remuneration Committee Enel, S.p.A. Mr. Luigi Ferraris Appointments and Remuneration Committee Enel, S.p.A.
Total number of institutional outside directors 4
Total % of the Board 44.444
Independent Outside Directors
Name or Company name of director: Mr. Alejandro Echevarría Busquet Profile: Degree in Business Administration from the University of Deusto, with specialisation from the Higher School. Recipient of the Jaume de Cordelles Prize (ESADE), the Best Basque Entrepreneur Award, the Best Business Administrator Award, and the “Valores de Empresa en Medios de Comunicación” (Business Values in the Media) Award.
Name or Company name of director: MR. Luis de Guindos Jurado
Profile: Bachelor’s Degree in Business Administration-CUNEF (with special honours), Ph.D. in Economics (Complutense University of Madrid) and government economist (ranked number 1 of the graduating class).
Name or Company name of director: Mr. Miquel Roca Junyent
Profile: Bachelor’s Degree in Business Administration from the University of Barcelona; Lecturer in constitutional law at Pompeu Fabra University in Barcelona; Honorary Doctorate from the distance learning universities of Leon and Girona.
Total number of independent directors 3
Total % of the Board 33.333
Other Outside Directors
State why these other outside directors may not be considered either
institutional or independent members, and their relationship, if any, with the Company, its officers and its shareholders:
Indicate any changes in the status of each director that occurred during the year:
B.1.4. State, where applicable, why institutional outside directors have been appointed at the initiative of shareholders whose shareholding is less than 5%.
State whether any formal requests have been rejected for a seat on the Board by shareholders with a shareholding equal to or greater than that of others who have successfully been appointed institutional outside directors. Where applicable, state the reasons for the rejection.
No
B.1.5. State whether any directors have tendered their resignation prior to completing their term of office, whether said directors have informed the Board of their reasons for doing so, and if so, by what means. If they have notified their reasons to the entire Board in writing, state the reasons:
B.1.6. Indicate which powers, if any, have been delegated to the Chief Executive Officer(s):
Name or Company name of director: Mr. Andrea Brentan
Brief description: On 30 june 2009 the Board of Directors delegated all the powers of the Board of Directors that could be delegated legally and statutorily to the Chief Executive Officer.
The Chief Executive Officer of Endesa, S.A., Mr. Andrea Brentan, shall exercise all powers delegated to him jointly with the Executive Committee of the Board of Directors.
B.1.7. Identify, where applicable, Board members who hold office as directors or executives at other companies belonging to the listed Company’s group:
Name or Company name of director Company name of Group Company Office
Mr. Andrea Brentan Enersis, S.A. Deputy Chairman
Mr. Luis de Guindos Jurado Empresa Nacional de Electricidad, S.A. Director
B.1.8. Where applicable, list any Company directors who are members of the boards of directors of non-Group companies that are listed on official securities markets in Spain, as disclosed to the Company:
Name or Company name of director Company name of listed Company Office
Mr. Borja Prado Eulate Gestevisión Telecinco, S.A. Director Mr. Alejandro Echevarría Busquet Compañía Vinícola del Norte de España Director Mr. Alejandro Echevarría Busquet Gestevisión Telecinco, S.A. Chairman
Mr. Miquel Roca Junyent ACS, S.A. Director
B.1.9. State and, where applicable, explain whether the Company has laid down rules regarding the number of boards on which its directors may hold seats:
No
B.1.10. In relation to recommendation 8 of the Unified Code, state general Company policies and strategies that require the full Board’s approval:
Investment and financing policy Yes
Definition of the structure of the corporate group Yes
Corporate governance policy Yes
Corporate social responsibility policy Yes
Strategic or business plan, management objectives and annual budgets Yes Compensation and performance evaluation policy for senior executives Yes Risk control and management policy and periodic monitoring of internal reporting and control systems Yes Dividend policy and treasury shares policy, particularly limits thereon Yes
B.1.11. List aggregate remuneration accrued by directors during the year in the following tables:
a) At the reporting Company:
Item In thousands of Euros
Fixed remuneration 1,912
Variable remuneration 2,591
Attendance fees 296
Bylaw-stipulated directors’ emoluments 0
Share options or other financial instruments 0
Other 16
Total 4,815
Other benefits In thousands of Euros
Advances 0
Loans granted 0
Pension funds and plans: Contributions 305
Pension funds and plans: Commitments 0
Life insurance premiums 150
Guarantees provided by the Company on behalf of directors 0
b) Arising from Company directors’ membership of other boards of directors or from their condition of senior executives at Group companies:
Item Data in thousands of Euros
Fixed remuneration 0
Variable remuneration 0
Attendance fees 81
Bylaw-stipulated directors’ emoluments 0
Share options or other financial instruments 0
Other 0
Total 81
Other benefits In thousands of Euros
Advances 0
Loans granted 0
Pension funds and plans: Contributions 0
Pension funds and plans: Commitments 0
Life insurance premiums 0
Guarantees provided by the Company on behalf of directors 0
c) Total remuneration by type of directorship:
Type of directorship By Company By Group
Executive directors 3,013 46
Institutional outside directors 1,118 0
Independent outside directors 684 35
Other outside directors 0 0
d) With respect to profit attributable to the parent Company
Total directors’ remuneration (thousands of Euros) 4,896
Total directors’ remuneration/profit attributable to the parent Company (stated as %) 0.1
B.1.12. Identify senior executives who are not executive directors, and indicate the total remuneration accrued during the year:
Name or Company name Office
Mr. Francisco Borja Acha Besga General Manager of Legal Advisory Mr. Javier Uriarte Monereo General Manager of Marketing Mr. José Damián Bogas Gálvez General Manager for Spain and Portugal Mr. Ignacio Antoñanzas Alvear General Manager for Latin America
Mr. Amado Franco Lahoz Chairman of Erz-Endesa Aragón Advisory Committee Mr. Jaime Gros Bañeres Regional General Manager for Aragon
Mr. Salvador Montejo Velilla General Secretary and Secretary of the Board of Directors Mr. Álvaro Quiralte Abello General Manager of Energy Management
Mr. Rafael López Rueda General Manager of Systems and Telecommunications Mr. José Luis Puche Castillejo General Manager of Organisation and Human Resources
Mr. Jaime Ybarra Llosent Chairman of the Advisory Committee for Sevillana Endesa Andalusia and Extremadura
Mr. Francisco Arteaga Alarcón General Manager for Andalusia and Extremadura Mr. Joaquín Galindo Vélez General Manager of Endesa Chile
Mr. Héctor López Vilaseco General Manager of Strategy and Development
Mr. Antón Costas Comesaña Chairman of the Advisory Committee for Fecsa-Endesa In Catalonia Mr. Antonio Torvá Jordán Deputy Chief Communication Officer
Mr. José María Rovira Vilanova General Manager of Fecsa-Endesa in Catalonia Mr. Andréu Rotger Amengual Regional General Manager for the Balearic Islands Mr. Pablo Casado Reboiro Regional General Manager for the Canary Islands Mr. José Luis Marín López-Otero General Manager of Endesa Red
Mr. Alfonso Arias Cañete General Manager of Nuclear Energy Mr. Alfonso López Sánchez Chief Communications Officer Mr. Pablo Yrarrázabal Valdés Chairman of Enersis Mr. Jorge Rosemblut Ratinoff Chairman of Endesa Chile Mr. Enrique Durand Baquerizo General Manager-Audit Mr. Manuel Morán Casero General Manager of Generation Mr. Francesco Buresti General Manager of Procurement Mr. Paolo Bondi Chief Financial Officer
Mr. Massimo Tambosco Deputy General Manager for Strategy, Regulatory and Strategic Planning Latam/Deputy Chairman Enersis
Total remuneration of senior executives (thousands of Euros) 18,150
B.1.13. Identify in aggregate terms whether there are any guarantee or “golden parachute” clauses for senior management, including executive directors of the Company or of its Group, in case of dismissal or changes in control. Indicate whether these contracts must be disclosed to or approved by the bodies of the Company or the Group.
Number of beneficiaries 24
Board of directors Annual General Meeting
Body authorising the clauses Yes No
B.1.14. Describe the procedure used to set Board members’ remuneration and indicate the relevant provisions in the Company Bylaws.
Procedure for setting Board members’ remuneration and relevant provisions in the Company Bylaws
The Board members’ remuneration is proposed by the Appointments and Remuneration Committee and approved by the Board of Directors, pursuant to Article 40 of the Company Bylaws and, more specifically, to Article 32 of the Regulations of the Board of Directors:
32.1. Directors’ remuneration consists of the following items: Fixed monthly payment and share in profits. Total annual remuneration for the entire Board for the above-mentioned items shall be one per thousand of consolidated Group profit, and shall be approved by the shareholders at the Annual General Meeting, although the Board of Directors may reduce this percentage in fiscal years as it sees fit. All the above without prejudice to the provisions of paragraph three under this Article regarding attendance fees.
The Board of Directors shall be responsible for the distribution of the above amount among the foregoing concepts and the directors in the manner, time and proportion stipulated by the Board at its discretion.
32.2. Board members shall also receive attendance fees for attending each of the meetings organised by the Company’s administrative bodies and committees. In accordance with the preceding paragraphs, said fees shall not exceed the figure established as fixed monthly payment. Within these limits, the Board of Directors may determine the amount of said fees.
32.3. The remuneration mentioned in the paragraphs above relating to Board directorships shall be compatible with any other professional or salary payments corresponding to directors for any other executive or advisory positions that they may hold in the Company, other than the joint supervisory and decision-making responsibilities specific to their office as directors. These remunerations shall be subject to the applicable legislation in force.
32.4. Pursuant to Article 130 of the Spanish Companies Act, directors may receive payments under the profit-sharing scheme only once appropriations to the legal and statutory reserves have been made and a shareholder dividend of at least 4 per cent has been declared.
32.5. Outside directors shall receive no remuneration other than that required to secure their services, except for group and liability insurance during their tenure as directors. 32.6. In accordance with paragraph three of Article 130, the Chairman shall also receive the remuneration specified in the legal contract governing his or her relationship with the Company.
In addition to the aforementioned provisions for Company directors, and pursuant to paragraph three of this Article, the Chief Executive Officer shall receive the remuneration established in his or her contract with the Company, specifying his or her rights and obligations, both during and after his or her relationship with the Company.
The size of fixed payments, the decision to make variable payments, and the remuneration of the Chairman and Chief Executive Officer, according to their specific schemes, shall be proposed by the Appointments and Remuneration Committee and shall be required to comply with transparency requirements.
32.7. The Appointments and Remuneration Committee shall draw up an annual report on directors’ remuneration policy which shall be approved by the Board of Directors and made available to shareholders.
State whether any of the following decisions require the approval of the full Board:
At the proposal of the Company’s chief executive, the appointment and eventual removal of
senior executives, as well as their indemnity clauses. YES
Directors’ remuneration and, for executive directors, additional compensation for their
executive functions and other conditions to be fulfilled by their contracts. YES
B.1.15. State whether the Board of Directors approves a detailed remuneration policy and specify the issues on which it makes a pronouncement:
YES
Amount of fixed components and, where applicable, itemised attendance fees for attending Board meetings and committee meetings, and an estimate of the annual fixed remuneration
derived thereof. YES
Variable remuneration components. YES
Main features of Social Security schemes, and their estimated cost,
or equivalent annual cost. YES
Terms that must be observed in contracts of executive directors who carry out senior
executive functions. YES
B.1.16. State whether the Board, in a separate point on the agenda, submits a report on directors’ remuneration policy for consultation and approval by the General Meeting. If so, explain the aspects of the report that relate to the remuneration policy approved by the Board for the coming years, significant changes therein with respect to the policy applied during the year and a summary of how the remuneration policy was applied during the fiscal period. Describe the role of the Remuneration Committee and state whether external advisory services were used. If so, identify the external consultants who provided advice:
NO
Role played by the Remuneration Committee
The Appointments and Remuneration Committee is responsible, among other things, for reporting and proposing the Directors’ Remuneration Policy and setting the amounts paid.
In order to establish remuneration policy, the Appointments and Remuneration Committee conducts research to guarantee corporate governance best practices. The principle of transparency shall apply to all aspects of remuneration, including compensation payments for termination.
The amount paid to directors is in keeping with amounts paid by other listed companies on the market.
The Appointments and Remuneration Committee shall draft an Annual Report on Directors’ Remuneration Policy, including an itemised breakdown of payments to each Company director in said capacity.
The Appointments and Remuneration Committee, pursuant to the Unified Code of Good Governance, shall submit an annual report to the Board of Directors on Directors’ Remuneration. Said report shall be approved by the Board of Directors and submitted to shareholders when summoned to the General Meeting.
Have external advisory services been used? YES
Name of external consultants
Towers Watson Mercer Hay Group Sagardoy Abogados
B.1.17. Indicate Company Board members who are also members of the boards of directors, or executives, or employees of companies that hold significant interests in the Company or in Group companies:
Name or Company name
of director Name or Company name of significant shareholder Office
Mr. Borja Prado Eulate Enel Energy Europe, S.R.L. Director Mr. Fulvio Conti Enel Energy Europe, S.R.L. Chairman
Mr. Fulvio Conti Enel, S.p.A. Chief Executive Officer and General Manager Mr. Andrea Brentan Enel Energy Europe, S.R.L. Chief Executive Officer
Mr. Claudio Machetti Enel, S.p.A. Director of Group Risk Management Function Mr. Gianluca Comin Enel, S.p.A. Director of External Relations
Mr. Luigi Ferraris Enel, S.p.A. Chief Financial Officer
Give details, where applicable, of any material relationships other than those envisaged under the preceding heading, between members of the Board of Directors and significant shareholders or Group companies:
B.1.18. Indique si se ha producido durante el ejercicio alguna modificación en el reglamento del Consejo:
B.1.18. Indicate whether any amendments were made to the Regulations of the Board of Directors during the year:
YES
Description of amendments
Article 5: Structure and Composition of the Board
The minimum and maximum number of directors shall remain unchanged, but, in accordance with the Unified Code of Good Governance, they shall be classified as executive directors, outside institutional directors, outside independent directors, and other outside directors.
Article 6: Functions and Responsibilities of the Board
New responsibilities relating to Company policies and strategies are expressly introduced (approval of the business plan, investment and financial policies, corporate governance policies, corporate social responsibility, remuneration and performance reviews for senior management, risk control and risk management, dividends and treasury shares) in accordance with the instructions and limits established by the General Meeting.
New responsibilities been introduced, giving the Board new competences in establishing general management rules regarding real estate operations that are not part of an industrial investment or divestment programme, and rules for purchases of goods and services by the Company.
It shall also be the responsibility of the Board to determine which organisational and operational faculties may be delegated to the CEO, approve the appointments, removals and indemnity clauses of senior management, and lay down the general organisational principles of the Company and the Group.
Once a year, the Board shall review its own quality and efficiency, the performance of the Chairman and the CEO, based on the report of the Appointments and Remuneration Committee, and the performance of the various Board Committees, based on the reports provided by said Committees.
The Board of Directors shall issue a set of regulations governing related-party transactions (said regulations were approved by the Board of Directors on 15 November 2010).
Article 13: Executive Commission
The Executive Commission shall implement those articles relating to the faculties delegated to it by the Board.
Article 14: Audit and Compliance Committee
In accordance with the Unified Code of Good Governance:
A new rule stipulates that the Audit and Compliance Committee may request external advisory services if it deems it necessary in order to carry out its functions. It may also summon any Company employee or director.
The description of the functions relating to supervision and knowledge of the Company’s financial reporting, information systems and internal control processes has been expanded.
The description of the function relating to relations with external auditors has been expanded.
Two new sections have been introduced on the information that must be filed with the Audit and Compliance Committee by the head of internal audit, and on the matters on which said committee must inform the Board of Directors.
Article 15: Appointments and Remuneration Committee
In accordance with the Unified Code of Good Governance:
A new rule stipulates that the Appointments and Remuneration Committee may request external advice whenever it considers it necessary to do so in order to carry out its functions.
The following new functions have been introduced: assessing the competencies, knowledge and experience required for membership of the Board and, consequently, defining the functions and necessary aptitudes of each Board member; assessing the time and dedication needed to be able to carry out the functions properly; sending the Board of Directors nominations for candidates to the Executive Committee and other committees; and, ensuring that Company remuneration policy is followed.
Last, The Appointments and Remuneration Committee shall engage in consultations with the Chairman and the CEO of the Company, especially on matters pertaining to executive directors or senior management. Any director may propose candidates to be considered by the Appointments Committee when covering vacancies on the Board.
Article 17: Relations with shareholders
A new rule stipulates that, based on of the report of the Audit and Compliance Committee, the Board of Directors shall approve an Annual Corporate Governance Report for the Company setting out the information required by law, along with any other content deemed appropriate. The Company shall maintain a corporate website containing information for shareholders and investors on which the information required by law shall be made public.
Article 18: Relations with significant shareholders This article has been eliminated.
Article 20: Relations with auditors
In accordance with the Unified Code of Good Governance:
A new rule stipulates that the Board of Directors shall attempt to present an audit report to the General Meeting that contains no reservations or qualifications. In the unlikely event that there are any, both the Chairman of the Audit Committee and the auditors shall explain in layman’s language the nature and scope of said reservations or qualifications to the shareholders.
Article 22: Appointment of directors
In accordance with the Unified Code of Good Governance:
A new rule stipulates that nominations for appointments or renewals of Directors by the Board of Directors to the General Shareholders’ Meeting shall be approved by the Board of Directors. A prior proposal from the Appointments and Remuneration Committee shall suffice for independent directors, and a report from said Committee shall be required for all other directors.
Article 23: Incompatibilities
The incompatibilities previously set out in the regulations have been eliminated, leaving only those prohibitions laid down by law.
Article 26: Removal and resignation of directors
In accordance with the Unified Code of Good Governance:
A new reason has been added to those requiring Directors to tender their resignation to the Board: when their continued membership of the Board risks undermining the Company’s reputation.
A new rule also stipulates that if any Directors are forced to give up their seat before the end of their mandate, whether due to resignation or to other reasons, they shall explain the reasons in a letter to all the other Board members. Regardless of whether said resignations are notified as a significant event, the reasons for the resignations must be set out in the Annual Corporate Governance Report.
Article 27: Directors’ Obligations
In accordance with the Unified Code of Good Governance:
A new rule stipulates that Directors are obligated to spend the required time and make the necessary effort to carry out their responsibilities in an efficient manner. Consequently, Directors must inform the Appointments and Remuneration Committee of any other professional duties in case these might interfere with the required dedication.
Article 30: Business opportunities
Article 31: Right to advice and information
In accordance with the Unified Code of Good Governance:
A new rule stipulates that the Company shall set up an orientation programme to quickly provide new directors with an adequate overview of the Company and of its corporate governance regulations. The Company shall make training provision for directors to update their knowledge when circumstances so advise.
Article 33: Director remuneration
The following rule has been rewritten: External directors shall receive no remuneration other than that required to secure their services without compromising their
independence, except for collective and liability insurance during their tenure as directors. Article 35: The Chairman of the Board
In accordance with the Unified Code of Good Governance:
A new rule stipulates that the Chairman shall be responsible for the efficient running of the Board of Directors. Thus, he or she shall ensure that Directors receive adequate prior information, stimulate discussion and active participation among Board members during Board meetings, safeguarding their right to express their opinions and make decisions freely, and organise periodic reviews of the Board, coordinating these with the appropriate Committee chairmen.
Article 38: The Secretary of the Board
In accordance with the Unified Code of Good Governance:
Within the section on ensuring compliance with the principles and criteria of corporate governance and the Company Bylaws, a rule has been added calling for the Secretary of the Board to ensure that the Board’s actions comply with current law, that they are in accordance with the Company Bylaws, regulations and other internal rules, and that they take into consideration any recommendations regarding good corporate governance.
B.1.19. Indicate the procedures for the appointment, renewal, assessment and removal of directors. Give details regarding competent bodies, formalities to be fulfilled and criteria to be used in each procedure.
Pursuant to Article 37 of the Company Bylaws, ‘The General Shareholders’ Meeting is responsible for appointing and removing directors. The position of Director may be waived, revoked or renewed’.
Directors’ appointments and renewals are governed by the Regulations of the Board of Directors:
Article 5. Structure and Composition of the Board.
The directors proposed by the Board for appointment or renewal shall be individuals of acknowledged prestige who possess the necessary professional experience and knowledge to perform their functions, and who are willing to make the necessary commitment.’
Article 21. Appointment of directors
‘The General Shareholders’ Meeting or, if applicable, the Board shall have the power to appoint their members pursuant to the provisions of the Spanish Companies Act and the Company Bylaws.
Appointments or renewals of directors to be proposed by the Board of Directors at the General Shareholders’ Meeting shall be approved by the Board of Directors. A prior proposal by the Appointments and Remuneration Committee shall suffice for independent directors, and a report from said Committee shall be required for all other directors.
The Regulations of the Board of Directors establish in Article 24 the renewal of directors as follows:
The Appointments and Remuneration Committee shall issue an advisory report on the directors proposed for renewal by the Board of Directors at the General Shareholders’ Meeting.
Article 25 of the Regulations of the Board of Directors governs the removal and resignation of directors as follows:
25.1. Directors shall relinquish their directorship at the end of the term for which they were appointed, and in all other applicable circumstances, pursuant to the law, the Bylaws and this regulation.
25.2. Directors shall tender their resignation to the Board, and present the corresponding letter of resignation:
• when their continued membership of the Board risks undermines the Company’s reputation and credit;
• when they are subject to disqualification on the grounds of incompatibility or any other legal grounds and when the Board, based on a prior report by the Appointments and Remuneration Committee, determines that they have incurred in grave infringements of their duties.
25.3. In the event of termination due to resignation or for other reasons, directors shall not render services in a Company considered a competitor for two years, except if the Board waives or reduces said prohibition.
25.4. If a Director is forced to give up his or her seat before the end of his or her mandate, due to resignation or for other reasons, they shall explain the reasons in a letter to all the other Board members. Regardless of whether said resignations are notified as a significant event, the reasons for the resignation must be set out in the Annual Corporate Governance Report.
B.1.20. Indicate the cases in which directors must resign.
The cases in which directors must tender their resignation to the Board of Directors are governed by Article 25 of the Regulations of the Board of Directors on removal of directors.
25.1. Directors shall relinquish their directorship at the end of the term for which they were appointed, and when any other circumstances applicable pursuant to the law, the Bylaws and this regulation are present.
25.2. Directors shall tender their resignation to the Board, and present the corresponding letter of resignation:
• when their continued membership of the Board risks jeopardising or undermining the Company’s reputation and credit;
• when they are subject to disqualification on the grounds of incompatibility or any other legal grounds or when the Board, based on a prior report by the Appointments and Remuneration Committee, determines that they have incurred in grave infringements of their duties.
25.3. In the event of a Director’s termination due to resignation or for other reasons, they shall not render services in a Company considered a competitor for two years, except if the Board waives or reduces said prohibition.
25.4. If a Director is forced to give up his or her seat before the end of his or her mandate, due to resignation or for other reasons, they shall explain the reasons in a letter to all the other Board members. Regardless of whether said resignations are notified as significant events, the reasons for the resignations must be set out in the Annual Corporate Governance Report.
B.1.21. State whether the Chairman of the Board of Directors also performs the functions of the Company’s Chief Executive Officer. If so, describe the steps taken to limit the risks inherent in power being concentrated in one person:
NO
Indicate and describe, where applicable, any rules that authorise one of the independent directors to convene a Board meeting, include new topics on the agenda, coordinate and voice the concerns of outside directors, and direct the review by the Board of Directors.
NO
Explanation of the rules
Article 43 of the Bylaws establishes that:
The Board shall meet whenever convened by the Chairman or acting Chairman, at his or her initiative or when asked to do so by at least two directors.
B.1.22. Is a qualified majority, other than a statutory majority, required for any specific type of decision?
NO
Describe how resolutions are adopted by the Board of Directors, specifying the minimum attendance quorum and the type of majority required to pass resolutions:
Description of resolution:
The Board shall be duly convened when half of the members plus one are present or represented by proxy at the meeting. Resolutions shall be adopted by a straight majority of the vote of the directors attending the meeting in person or by proxy.
Quorum %
One half plus one 55.55
Type of majority %
Straight 55.55
B.1.23. Explain whether there are any specific requirements, other than those pertaining to the directors, to be appointed Chairman.
NO
B.1.24. State whether the Chairman has a casting vote:
YES
Matters on which there is a casting vote
Pursuant to Article 46 of the Company Bylaws, ‘the Board shall discuss the matters included in the agenda and those proposed by the Chairman or by the majority of attending or proxy members, even if not included therein. Resolutions shall be adopted by the straight majority of the vote of the directors attending the meeting in person or by proxy. In the event of a tie, the Chairman or the member exercising his or her functions shall have the casting vote. The provisions of this paragraph shall be considered without prejudice to those resolutions requiring a qualified majority of directors as per Company Bylaws or current legislation’. Likewise, Article 11 of the Regulations of the Board of Directors establishes that ‘the Chairman or whoever is exercising his or her functions shall have the casting vote in the event of a tie’.
B.1.25. Indicate whether the Bylaws or the Regulations of the Board of Directors specify any age limit for directors:
NO
Age limit for Chairman Age limit for Chief Executive Officer Age limit for Directors
0 0 0
B.1.26. Indicate whether the Bylaws or the Regulations of the Board of Directors set a limit on the term of office for independent directors:
NO
B.1.27. If the number of female Board members is nil or small, explain the reasons why and describe the steps taken to correct this situation.
Description of the reasons and initiatives
At present there are no women on Endesa’s Board of Directors. Nevertheless, Endesa does have an Equality Plan in place, reasserting its commitment to ensure compliance with the gender equality principle, which comprises:
• HR policy measures (affirmative action covering recruitment, training, remuneration, and gender or sexual harassment).
• Work-life balance measures (paid leave, extended leave of absence, working day reductions or changes, etc.), among which, additional time flexibility (up to one hour per day) and, in specific cases, the possibility of temporarily exchanging the working day with a lunch break to the continuous working day.
• Pregnancy, maternity and paternity: special closed-shift scheme for female workers. • Protection for victims of domestic violence.
• Action protocol in the event of gender or sexual harassment.
Within the framework of Endesa’s corporate social responsibility policies, the Company’s recruiting policy includes:
Establishing affirmative action measures that foster access by women with equal merits to positions where they are underrepresented.
Endesa has been awarded the ‘Equality in the Workplace’ (‘Igualdad en la Empresa’) award by the Ministry of Health, Social Policy and Equality, a sign of excellence that distinguishes companies who are committed to equality and who stand out for their policies regarding equal opportunity in the workplace, their organisational models and in other areas such as company services, products and advertising.
Endesa is one of six Ibex 35 companies who have received the award, which has been given to a total of 36 organisations out of a total of 600 requests. Among the most salient aspects taken into account in the concession of the ‘Equality in the Workplace’ award are the balance between men and women in decision-making areas, access to positions of greater responsibility, establishment of remuneration criteria and systems, and up-to-date professional classifications that allow jobs held by men and women, either the same or different, to be assessed fairly,
In all cases, the Appointments and Remuneration Committee ensures that recruitment procedures do not contain any implicit bias that hinders the appointment of directors on personal grounds.
Specify whether the Appointments and Remuneration Committee has laid down any procedures to make sure that the recruitment process does not contain any implicit bias that might prevent female directors from being recruited, and to deliberately seek out female candidates who fit the required profile:
YES
Describe the main procedures
Article 15 of the Regulations of the Board of Directors establishes that the Appointments and Remuneration Committee shall be responsible for reporting on prospective Board members and proposing their appointment, either through co-option or by submitting it for approval by the General Shareholders’ Meeting.
Pursuant to Article 5 of the Regulations of the Board of Directors, the directors proposed by the Board for appointment or renewal shall be individuals of acknowledged prestige who possess the necessary professional experience and knowledge to perform their functions, and who are willing to make the necessary commitment.
B.1.28. Indicate whether there are any formal procedures for granting proxies to vote at Board meetings. If so, explain briefly.
Article 44 of the Company Bylaws establishes that ‘representation by proxy should be conferred in writing and specifically for each Board meeting. No director may hold more than three proxies, except for the Chairman, who is not thus limited, although he may not represent the majority of the Board’.
Article 11 of the Regulations of the Board of Directors determines that ‘each Director may transfer his or her proxy to another Board member, pursuant to the provisions of the Company Bylaws’.
B.1.29. Indicate the number of Board meetings held during the year and how often the Board has met without the Chairman’s attendance:
Number of Board meetings 11
Number of Board meetings without Chairman’s attendance 0
Indicate how many times the various Board Committees met during the year.
Number of Executive or Delegated Committee meetings 0
Number of Audit Committee meetings 9
Number of Appointments and Remuneration Committee meetings 9
Number of Appointments Committee meetings 0
B.1.30. State how many Board meetings during the financial year were not attended by all members. For this purpose, proxies without specific instructions attached shall be considered equivalent to non-attendance:
Number of absentee directors during the period 0
Absentees as % of total votes during the period 0
B.1.31. Indicate whether the individual and consolidated financial statements submitted for approval by the Board are previously duly certified:
YES
Indicate, as applicable, the person(s) who signed the Company’s individual and consolidated financial statements for authorisation for issue by the Board:
Name Office
Mr. Andrea Brentan Chief Executive Officer
Mr. Paolo Bondi Chief Financial Officer
B.1.32. Explain the mechanisms, if any, established by the Board of Directors to prevent the individual and consolidated financial statements submitted at the Annual General Meeting from containing a qualified auditors’ report.
There are no such special mechanisms, although in accordance with applicable commercial law and in order to be approved by the relevant Annual General Meeting, the directors determine the accounting policies and establish the necessary control systems for the individual and consolidated financial statements to present fairly the consolidated Group’s equity and financial position, the results of its operations and its cash flow.
Furthermore, in order to verify that there are no differences between the above-mentioned criteria and the policies adopted, external auditors verify the financial statements and are regularly informed of the controls and procedures defined by the Company and its subsidiaries. They work with total freedom, and they have access to the Audit and Compliance Committee to deliver their conclusions and recommendations, as well as to the minutes from meetings of the Board of Directors, the Executive Committee, the Audit and Compliance Committee and the Appointments and Remuneration Committee.
The External Auditor has submitted audit reports on the consolidated financial statements for the last 21 tax years, expressing an unqualified opinion.
B.1.33. Is the Board Secretary a director?
B.1.34. Describe the procedures for appointment and removal of the Board Secretary, stating whether the appointment and removal are notified by the Appointments Committee and approved by the Board in full.
Appointment and removal procedure
Article 37 of the Regulations of the Board of Directors establishes that the Secretary shall be appointed by the Board of Directors at the Chairman’s proposal.
Does the Appointments Committee report on the appointment? YES
Does the Appointments Committee report on the removal? YES
Is the appointment approved by the full Board? YES
Is the removal approved by the full Board? YES
Is the Board Secretary specifically charged with ensuring compliance with the good governance recommendations?
YES
Remarks
Article 37 of the Regulations of the Board of Directors establishes that the Secretary shall be responsible for the observance of corporate governance principles and criteria, and the provisions of the Company Bylaws and regulations.
B.1.35. Indicate which mechanisms, if any, have been established by the Company to preserve the independence of its auditors, financial analysts, investment banks, and rating agencies.
Pursuant to Article 51 of the Company Bylaws, the Audit and Compliance Committee is responsible for ensuring good corporate governance and transparency throughout all Company activities in economic-financial and external auditing terms and internal audit compliance, maintaining a relationship with external auditors in order to receive information on matters that might compromise their independence and on any other matters pertaining to the auditing process, and all other disclosures stipulated in auditing legislation and auditing standards.
Moreover, there is no relation other than that derived from professional activities with financial analysts, investment banks and credit rating agencies.
B.1.36. State whether the Company has changed its external auditor during the period. If so, name the incoming and outgoing auditors:
NO
Outgoing auditor Incoming auditor
If there were disagreements with the outgoing auditor, describe the nature of the disagreements:
NO
B.1.37. Indicate whether the auditor performs other non-audit work for the Company or its Group. If so, state the amount of fees received for said work and the percentage of the fees billed to the Company or its Group:
NO
Company Group Total
Amount of other non-audit work (thousands of Euros) 0 0 0 Amount of other non-audit work/total amount billed by audit firm
(as a %) 0.000 0.000 0.000
B.1.38. State whether the audit report on the financial statements for the previous year contained reservations or qualifications. If so, state the reasons given by the Chairman of the Audit Committee to explain the nature and scope of said reservations or qualifications.
NO
B.1.39. Indicate the number of consecutive years during which the current auditor has audited the financial statements of the Company or Group. Show the number of years during which the current auditor has been engaged as a percentage of the total number of years during which the financial statements have been audited:
Company Group
Number of consecutive years 2 2
Number of years audited by the current auditor/total number
of years audited (as a %) 0.1 0.1
B.1.40. Indicate any interests, disclosed to the Company, held by the members of the Company’s Board of Directors in the capital of entities engaging in an activity that is identical, similar or complementary to the statutory activity of the Company or its Group. Indicate also the positions they hold and the functions they perform at these companies.
Name or Company name of director Name of investee % ownership Position / functions
Mr. Borja Prado Eulate Enel Green Power, S.p.A. 0.001 —
Mr. Borja Prado Eulate Enel Energy Europe, S.R.L. 0.000 Director
Mr. Fulvio Conti Enel Green Power, S.p.A. 0.002 —
Mr. Fulvio Conti Enel Energy Europe, S.R.L. 0.000 Chairman
Mr. Fulvio Conti Enel, S.P.A. 0.006 Chief Executive Officer And General Manager
Mr. Andrea Brentan Enel Green Power, S.p.A. 0.000 Director
Mr. Andrea Brentan Enel Energy Europe, S.R.L. 0.000 Chief Executive Officer
Mr. Andrea Brentan Enel Investment Holding 0.000 Director
Mr. Claudio Machetti Enel Trade, S.p.A. 0.000 Director
Mr. Claudio Machetti Enel. RE LTD 0.000 Chairman
Name or Company name of director Name of investee % ownership Position / functions
Mr. Claudio Machetti Enel Produzione, S.p.A. 0.000 Director
Mr. Claudio Machetti Enel New. Hidro S.R.L. 0.000 Chairman
Mr. Claudio Machetti Terna, S.p.A. 0.000 Director
Mr. Claudio Machetti Enel Investment Holding 0.000 Director
Mr. Claudio Machetti Enel Distribuzione, S.p.A. 0.000 Director
Mr. Gianluca Comin Enel Green Power, S.p.A. 0.000 —
Mr. Gianluca Comin Enel, S.p.A. 0.000 Director Of External Relations
Mr. Luigi Ferraris Enel OGK-5 OJSC 0.000 Director
Mr. Luigi Ferraris Enel Green Power, S.p.A. 0.001 Chairman
Mr. Luigi Ferraris Enel Investment Holding 0.000 Director
Mr. Luigi Ferraris Enel Factor S.p.A. 0.000 Chairman
Mr. Luigi Ferraris Enel, S.p.A. 0.000 Chief Financial Officer
Mr. Luigi Ferraris Enel Distribuzione, S.p.A. 0.000 Director
Mr. Luigi Ferraris Enel Produzione, S.p.A. 0.000 Director
Mr. Luigi Ferraris Enel Ingegneria E Innovazione, S.p.A. 0.000 Director
Mr. Luis de Guindos Jurado Enel Green Power, S.p.A. 0.000 —
B.1.41. Indicate whether there is a procedure in place for directors to avail themselves of external advisory services, and if so, give details:
YES
Details of procedure
The right to advice and information is regulated by Article 30 of the Regulations of the Board of Directors:
‘Directors shall have access to all of the Company’s services and may gather information and obtain whatever advice they may require regarding any aspect, whenever the discharge of their duties so demands. The right to information extends to all the Group companies. Said information shall be requested from the Chairman, through the Board Secretary, and implemented by the Chief Executive Officer.
If, in the course of carrying out their duties, directors encounter specific problems of certain importance and complexity, they shall, by majority vote, have the power to propose to the Board the hiring of legal, accounting, technical, financial, commercial or other advisors at Company expense.
The above-mentioned proposal shall be notified to the Company’s Chairman, through the Board Secretary, and implemented by the Chief Executive Officer. The Board may turn down the request for the above advice if it considers it unnecessary for the furtherance of their duties, if the cost is disproportionate compared to the magnitude of the problem, or if said technical assistance may be adequately provided by Company personnel’.
The Company shall set up an orientation programme to quickly provide new directors with an adequate overview of the Company and of its corporate governance regulations. The Company shall make training provision for directors to update their knowledge when circumstances so advise.
B.1.42. Indicate whether there is a procedure in place for directors to receive the information they need to prepare meetings of the managing bodies in a timely manner, and if so, give details:
YES
Details of procedure
Article 41 of the Company’s Bylaws establishes that: ‘By virtue of their position, directors are responsible for: a) Compiling the necessary information and properly preparing the Board meetings and those of the corporate bodies to which they belong’. Pursuant to the above, Company services provide directors with the information pertaining to the meeting, seven days in advance, if possible, or at least 48 hours prior to said meeting.
B.1.43. Indicate whether the Company has established rules that compel directors to disclose information and, if applicable, to resign in cases where they may harm the Company’s credit and reputation. If so, give details.
YES
Describe the rules
Article 25 of the Regulations of the Board of Directors establishes that Directors shall relinquish their directorship at the end of the term for which they were appointed, or whenever any other applicable circumstances arise, pursuant to the law, the Bylaws and this Regulation.
Directors shall tender their resignation to the Board, and formalise the corresponding resignation if they are disqualified on the grounds of conflict of interest or any other legal grounds, or when the Board, on the basis of the report of the Appointments and Remuneration Committee, determines that the Director has incurred in grave infringements of his or her duties.
B.1.44. State whether any Board member has advised the Company that he or she has been prosecuted or ordered to stand trial for any of the criminal offences referred to in Article 124 of the Spanish Companies Act:
NO
State whether the Board of Directors has analysed the case. If so, provide the rationale for the decision as to whether or not the director should remain on the Board.
B.2. Committees of the Board of Directors
B.2.1. Provide details of all the committees of the Board of Directors and their members:
Executive Or Delegated Committee
Name Office Type
Mr. Borja Prado Eulate Chairman Executive
Mr. Andrea Brentan Member Executive
Mr. Fulvio Conti Member Institutional Outside
Mr. Luigi Ferraris Member Institutional Outside
Mr. Luis De Guindos Jurado Member Independent Outside
Audit Committee
Name Office Type
Mr. Alejandro Echevarría Busquet Chairman Independent Outside
Mr. Borja Prado Eulate Member Executive
Mr. Luigi Ferraris Member Institutional Outside
Mr. Miquel Roca Junyent Member Independent Outside
Appointments and Remuneration Committee
Name Office Type
Mr. Luis De Guindos Jurado Chairman Independent Outside
Mr. Claudio Machetti Member Institutional Outside
Mr. Luigi Ferraris Member Institutional Outside
Mr. Miquel Roca Junyent Member Independent Outside
B.2.2. State whether the Audit Committee is responsible for the following:
Supervising the preparation and integrity of the financial information on the Company and, where applicable, the Group, reviewing compliance with regulatory requirements, proper delimitation of the scope of consolidation and correct application of accounting policies. YES Conducting periodic reviews of risk management and internal control systems, such that the main
risks are adequately identified, managed and disclosed. YES
Safeguarding the independence and effectiveness of the internal audit function; proposing the recruitment, appointment, renewal and removal of the head of internal audit service; proposing the budget for this service; receiving regular reports on its activities; and verifying that the conclusions and recommendations of its reports are taken into account by senior management. YES Establishing and supervising a mechanism that allows employees to confidentially and, if appropriate, anonymously, report on potentially significant irregularities, especially those of a financial or
accounting nature, that they detect within the Company. YES
Bringing before the Board proposals for the recruitment, appointment, renewal and replacement of
the external auditor, as well as the terms of the auditor’s engagement. YES Receiving information on a regular basis from the external auditor regarding the audit plan and
the results of its execution, and verifying that senior management takes its recommendations into
account. YES
Ensuring the independence of the external auditor. YES
B.2.3. Describe the organisational structure, operating rules and responsibilities attached to each Board committee.
Committee: Appointments and Remuneration Committee.
Brief description: Article 15 of the Regulations of the Board of Directors governs the Appointments and Remuneration Committee:
15.1. The Appointments and Remuneration Committee shall be composed of no less than four and no more than six members of the Board of Directors, appointed by the majority vote of the Board. The Committee shall be composed of a majority of outside directors. The Board of Directors shall appoint members to the Appointments and Remuneration Committee on the basis of their knowledge, aptitudes and experience.
15.2. The Chairman of the Appointments and Remuneration Committee shall be designated by the Board of Directors and approved by the majority vote of the Board from among the outside directors. The Chairman shall be replaced every four years but may seek reappointment after stepping down for one year. In his or her absence, the Chairman shall be replaced by a director provisionally appointed by the Board of Directors, or else by the oldest Committee member.
15.3. The Appointments and Remuneration Committee shall meet whenever
summoned by the Chairman, or when so decided by the majority of its members, or at the request of the Board of Directors. Committee meetings shall be held at the Company’s registered office or at any other location proposed by the Chairman and indicated in the call notice. The Committee shall be duly convened if the majority of its members attend the meeting.
15.4. Resolutions shall be adopted by majority vote of the directors attending the meeting. In the event of a tie, the Chairman, or whoever is exercising his or her functions, shall have the casting vote.
15.5. The Appointments and Remuneration Committee may require external advisory services whenever it deems it necessary to be able to carry out its functions. 15.6. The Secretary of the Board of Directors shall be the Committee Secretary, drawing
up the minutes of the adopted resolutions and, in turn, notifying the Board. 15.7. The Appointments and Remuneration Committee shall be responsible for, among
other things, reporting on and proposing the appointment of Board members, either through co-option or by submitting them for approval by the General Shareholders’ Meeting, and ensuring that the recruitment procedures do not exhibit implicit bias that might prevent female directors from being recruited. The Committee shall also report on the directors’ remuneration.
The Committee shall also be responsible for:
Assessing the competencies, knowledge and experience required for membership of the Board and, consequently, defining the functions and necessary aptitudes of each Board member; assessing the time and dedication needed to be able to carry out the functions properly;
Putting before the Board of Directors nominations for candidates to the Executive Committee and other committees;
Notifying the Board of Directors of appointments and dismissals of Endesa senior management and of the chief executives of Enersis, Chilectra and Endesa Chile.
Approving senior management remuneration pursuant to the terms defined in the preceding paragraph.
Deciding on the implementation of senior management remuneration schemes based on Company results. The Committee shall also be aware and appraise Company executive policies, especially those regarding training, promotion and recruitment.
Defining specific relationship schemes between the Company and the Chairman and Chief Executive Officer.
Drafting, modifying and approving the senior management Bylaws. Ensuring that Company remuneration policy is adhered to.
These functions shall include, but not be limited to, other responsibilities entrusted by the Board of Directors. The Board may request the Committee to draft reports on matters pertaining to its activities.
The Appointments and Remuneration Committee shall consult with the Chairman and the Chief Executive Officer, especially on issues relating to executive directors and senior management. Any director may propose candidates for consideration by the Committee in the event that they might be suitable to fill a vacancy on the Board.
Committee: Executive Or Delegated Committee
Brief description: Article 13 of the Regulations of the Board of Directors governs the Executive Committee:
13.1. The Executive Committee shall be composed of no less than five and no more than seven Directors, including the Chairman and the Chief Executive Officer. The Chairman of the Board of Directors shall be the Chairman of the Executive Committee, and the Board Secretary shall act as Secretary of the Committee. The Board of Directors’ replacement scheme shall apply to this Committee.
13.2. The Executive Committee shall adopt the resolutions corresponding to the powers delegated to it by the Board.
13.3. Executive Committee members shall be appointed by the vote of, at least, two thirds of the Board members.
13.4. Executive Committee resolutions on matters pertaining to the powers delegated by the Board are compulsory as from their adoption. However, when the Chairman or the majority of the Executive Committee members deem it
convenient given the significance of the matter, Executive Committee resolutions shall subsequently be submitted for ratification by the Board.
13.5. The Secretary of the Executive Committee, who shall also be the Board Secretary, shall draw up the minutes of the adopted resolutions, which shall, in turn, be notified to the Board.
Committee: Audit Committee
Brief description: Article 14 of the Regulations of the Board of Directors governs the Audit and Compliance Committee:
14.1. The Audit and Compliance Committee shall be composed of no less than four and no more than six members of the Board of Directors, appointed by majority vote of the Board. The Committee shall be composed of a majority of outside directors.
14.2. The Chairman of the Audit Committee shall be appointed by the Board of Directors, chosen from among the outside directors by majority vote. The Chairman shall be replaced every four years and may be reappointed after stepping down for one year. In his or her absence, the Chairman shall be replaced
by a Committee director provisionally appointed by the Board of Directors, or else by the oldest member of the Committee.
14.3. The Board of Directors shall take care to appoint members of the Audit Committee and, in particular, the Committee Chairman, on the basis of their expertise and experience regarding accounting, audit or risk management. 14.4. The Audit and Compliance Committee shall convene whenever summoned by its
Chairman, when the majority of its members so decides, or at the request of the Board of Directors. Committee meetings shall be held at the Company’s registered office or at any other location proposed by the Chairman and indicated in the call notice. The Committee shall be duly convened when the majority of its members attend the meeting.
14.5. Resolutions shall be adopted by majority vote of the directors present at the meeting. In the event of a time, the Chairman, or whoever is exercising his or her functions, has the casting vote.
14.6. The Audit Committee may request external advisory services whenever it considers it necessary to do so in order to carry out its functions. It may also summon any Company employee or director.
14.7. The Secretary of the Board of Directors shall be the Committee Secretary, who shall draw up the minutes of the resolutions adopted by the Committee and notify the Board of them.
14.8. The main responsibility of this Committee shall be to guarantee good corporate governance and transparency throughout the Company’s activities in economic-financial, external audit and compliance and internal audit areas. The Committee shall be responsible for:
a) Reporting on the issues within its remit raised by shareholders at the General Meeting;
b) Proposing to the Board of Directors for submittal to the General Shareholders’ Meeting the appointment of external auditors pursuant to Article 57 of these Bylaws;
c) Monitoring internal audit services;
d) Keeping abreast of the Company’s financial reporting procedures and information and internal control systems;
1) Supervising the drawing up and integrity of Company and, if applicable, Group financial information ensuring compliance with legal requirements, adequate delimitation of the scope of consolidation, and correct application of accounting principles.
2) Periodically revising internal control and risk management systems, to ensure that the main risks are identified, managed and notified appropriately. 3) Ensure that the internal audit function is carried out with independence and
efficiency; proposing the recruitment, appointment, renewal and dismissal of the head of internal audit; proposing a budget for the service; receiving periodic reports on its activities; and verifying that senior management take due consideration of the conclusions and recommendations set out in its reports.
4) Establishing and supervising a mechanism that allows employees to confidentially and, if appropriate, anonymously, report on potentially significant irregularities, especially those of a financial or accounting nature, that they detect within the Company.
